WHAT YOU NEED TO KNOW
There are many things to take into consideration when purchasing property. Among those, the most vital to be aware of would be your personal finances. You want to be knowledgeable about your monthly expenses, and how much disposable income you are left with after those expenses are accounted for. This will largely take part in how big or small of a loan a bank will qualify you for.
DEBT-TO-INCOME: BACK-END RATIO
Your debt-to-income: back-end ratio is used to determine the portion of your income that is used for monthly payments. The back-end ratio includes everything from housing payments, car payments, and even expenses like child support and alimony. When approving a loan, a bank generally wants to see a back-end ratio of 45% or less, but having a DTI over 45% won’t automatically disqualify your mortgage application.
HOW DOES REFINANCING WORK?
The term “financing” is the act of borrowing money from a bank to help pay for a property. If at a later date, the homeowner wishes to replace his mortgage in order to try and obtain a lower rate, the initial process is repeated. This is what we call “re-financing”, and this new mortgage rate is then used to repay, and replace the old one.
THERE IS NO NEED TO FIGURE IT OUT ON YOUR OWN, I AM HERE TO HELP.